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18
Jun

How Once Town’s Flood Has Shaped Australian Insurance

When the river rose, so did the risk. In October 2022, Shepparton in Northern Victoria endured one of its worst floods in living memory. Homes, farms, and local businesses were hit hard. Even properties that had never seen floodwater before were suddenly underwater.

For many, the shock didn’t end when the water receded. One Shepparton couple, whose home remained untouched by floodwater, saw their insurance premium leap from $750 to $17,000 in just two years. The reason? Their postcode was now considered ‘high risk’, regardless of their claims history or the property’s flood record.

A Warning Echoed Across Australia

Shepparton’s experience was not unique. The 2022 flood event impacted 81% of local government areas across Victoria. In the aftermath, insurance became unaffordable or simply unavailable for many residents and businesses, especially in Shepparton and similar communities.

A Victorian Government inquiry, tabled in July 2024, called for better flood risk information and smarter planning to prevent the insurance crisis from worsening.

In many ways, the report offered an early warning about the direction of Australia’s insurance landscape.

The problem extends well beyond Victoria. In 2022, insured losses from floods across eastern Australia hit a record $7 billion, while average home insurance premiums rose by 14% – the steepest increase in a decade.

These are clear signals that insurers are recalibrating risk in response to a more volatile climate. And the climate hasn’t let up since.

Why Premiums are Climbing

  • There’s no single reason for skyrocketing premiums. Here are the key factors:
  • More disasters mean more claims – Floods, bushfires, and storms are happening more often, and the damage is significant
  • Rebuild costs have surged – Construction material prices rose 12% in 2022 alone
  • Reinsurance is more expensive – Insurers are paying more to cover their own risks, which flows down to policyholders

Why Insurance Walks Away

After the flood, the Greater Shepparton City Council faced a new reality. Pre-flood, their assets were insured for $20 million, according to an ABC News report. Now, they can only secure $2 million in coverage and that’s at a higher premium. That’s not just a funding gap; it’s a shift in how the insurance sector
views ‘exposure’.

Shepparton is far from alone. The Climate Council has identified dozens of Australian suburbs and towns now facing partial or full ‘uninsurability’ due to mounting climate risk.

How Communities Can Take Charge

There’s some good news: momentum for smarter, localised resilience planning.

The Insurance Council of Australia has backed Senate recommendations for stronger infrastructure and land use policies. The focus is shifting to preventing climate-related damage before it happens, rather than relying on payouts after the fact.

This shift includes:

  • Boosting flood defences – From levee upgrades to creek maintenance
  • Rethinking zoning – Avoiding new development in flood-prone areas
  • Incentivising property upgrades – Grants or discounts for installing flood barriers or raising homes

What This Means for Your Business

You don’t have to be based in Shepparton for this to matter.

If your SME relies on a shopfront, warehouse, or commercial site, rising climate risk could affect your insurability. Policies are being reassessed more frequently, and postcodes once seen as ‘low risk’ may now attract exclusions or premium hikes.

That’s why it’s more important than ever to understand how your property is classified, what coverage you actually have, and what can be done to reduce your exposure.

As your broker or adviser, we can work with you to review your current policies, explain emerging risks, and identify options that keep your business protected and future-ready. Whether you’re located in a floodplain or just feeling uncertain about what’s coming next, now’s the time to act, not wait for the water to rise.

 

Article Supplied by OneAffiniti

Photo by Bilanol

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